What Are We Really Worth? A Cold Calculation Regarding The Team As The Taxman Cometh: plus An Interview with Edgaras Jankauskas
Posted by tonybiscaia on May 27, 2010
A VIEW FROM THE FORT by Jim Dow
In a recent issue of the Sunday New York Times Magazine on the theme of What Are You Really Worth, a series of articles explored the analytical methods used to determine the economic value of everything from a single human life ($6.1 million, according to the EPA in 2001) to the potential price for preventing the extinction of the entire species ($600 trillion as calculated by Richard Posner, a legal ethicist). By these metrics David Beckham’s present pay packet is worth roughly the life of one solitary soul, regardless of the quality of their right peg.
But closer to home, in the wake of a debacle against Benfica and multiple misses from both sides in Toronto an equally pragmatic look at the Revolution compensation level gives an interesting perspective to the team’s current competitive droop. What you pay for makes for what you get and there are some interesting numbers to compare and contrast.
Taking the current value of the US dollar as $1.44 to the British pound, the average wage in the Premier League where Clint Dempsey plies his trade is around $2,102,400 according to the Telegraph newspaper last March. For the remainder of the Football League the last reliable figures are from 2006 as published in the Independent newspaper. Back then an average Coca-Cola Championship player pulled down about $282,663 in salary annually, although a Yahoo Answers UK claims as of last March a current figure of $375,000 although had TnT gone off to Preston, in the days when they were in the Championship, one presumes he would have been offered a lot more than that. In League One, where the erstwhile Paul Mariner will be dispensing his tactical nous next season, the middling pay packet in 2006 was $97,975 now up to $150,000 according to Yahoo. And way, way down in League Two, the level where Khano couldn’t cut it, most players performed for $71,622 base in ‘06 and now make a bit more, $75K. Again, these latter figures may not hold true, given the wobbliness of online info sites but they offer a good starting point for useful analysis. To make the disparity worse, soccer salaries in most countries are at net value, with the tax bite (from 25-50%) added on as opposed to here in the States where salary figures are publicized as the gross, pre-tax figure. As a cautionary tale, however, note what Edgaras Jankauskas has to say in the interview below. Finally, most teams everywhere outside MLS offer a bonus program based on a combination of personal and team achievements and these can add as much as 80% to base salaries in some cases.
One immediate solution to the non-competitive nature of many midseason MLS matches would be to institute a serious performance bonus program but while that is for another article, it is so obvious a solution as to bring the penurious nature of the league into even starker contrast with the rest of the world. At the same time, it is important to remember that most proper football teams, from Chelski to F.C. Caracas, operate in the red and many, many venerable clubs are at or near the wall on a semi-permanent basis. What keeps the giant Ponzi scheme that is world club football going is a combination of passion and eternal hope, which makes otherwise sensible business types throw good money after bad to the benefit of fans, players and their own egos but not the bottom line.
The average salary in MLS, based on a 24-man roster with a salary cap of $2.5 million, is a gross figure of $104,167, higher than League One in 2006, but far less than what Yahoo UK seems to say. This doesn’t take into account the tax man’s bite, DP’s, Generation Addidas and other variables and does presume that the Revos spend 100% of their cap money but it is a reasonable starting point for discussion, particularly given that there are no such caps in the English professional game (or really anywhere else, save Germany). If you accept that dollars paid are a fair measuring stick for quality displayed, then Shalrie Joseph and Taylor Twellman are locks as being of Championship caliber plus with their +$400K salaries. Marko Perovic, Emanuel Osei, Kevin Alston, Matt Reis, Cory Gibbs and Edgaras Jankauskas could cut it in League One being between $100 and $200K. Everyone else, well there is always Lincoln City in League Two at $75,000 or wait, maybe not…you get the point.
Based on this way of looking at things, the 2010 Revs are exactly what their present record and rate of remuneration indicates they are as of this writing, a bottom level team in a relatively cut-price league. Worse, one of their two Championship level players is out long term and likely for good and at least three of their League One-plus level guys aren’t playing on a regular basis, leaving Stevie Nicol to send out lineups studded with individuals who earn less and might be less accomplished when rated by dollar value than fourth tier footballers in the U.K. And by the way, have you watched, er, endured a League Two match? Yikes, makes the current scrambles at the Boro look like fine art!
Of course such scrutiny doesn’t take into account any potential for improvement, which is considerable nor does it address the possibility of additions to the squad, difficulty of schedule, injuries, suspensions and so forth. But with Foxborough attendance (10,119) currently below the level of Championship clubs like Doncaster Rovers (10,992) and Plymouth Argyle (10,316 and taking the drop) and well on the way towards Peterborough (8913 and going down as well), plus Major League Lacrosse’s Cannons (10,288 for 2 games, in town stadium anyone?), other than love, pride or ego, what incentives exist for the current ownership to pitch good money into improving the team? Indeed do Robert and/or Jonathan Kraft possess any of those crucial, albeit impractical emotions when it comes to proper football and their MLS team?
And therein lies a significant rub; those clubs that spend on items that lie outside of the purview of the salary cap, such as DP salaries, scouting networks and training trips, advertising, SSstadiums, outside support for players, youth development at all levels, searching out sponsors, etc. these added costs are the model for MLS 2.0, an operating system that demands a far higher commitment of resources than has traditionally been the case league-wide. This is not to ignore the TV package, the Revolution Academy, bus trips to DC for the 2007 finals and the many other quantum improvements since the bad old days of the notorious “soft opening” of Gillette Stadium. But the bar has been raised by such disparate entities as a comic from Cleveland, an energy drink empire and a bunch of Philly hedge fund folks and the cost of doing effective business in MLS is, like everything else, going up.
Returning to the playing staff, the most effective scorers currently in MLS (newbies aside) are Juan Pablo Angel ($1,798,000), Guillermo Barros Schelotto ($775,000), Edson Buddle ($180,000), Connor Casey ($200,000), Brian Ching ($242,000), Jeff Cunningham ($267,500), Dwayne De Rosario ($357,000), Landon Donovan ($900,000), Freddy Montero ($155,000), plus Twellman at $420,000 for an average salary of $770,200, well above the Championship norm and net but nothing like world class Premiership poachers like Drogba or Rooney get paid. Certainly you could make an argument that a healthy, productive Twellman might be banking at least a million per annum if he were currently playing for Preston and not locked into what has turned out to be a mutually difficult contract with Kraft FC. But, most importantly, should one of the best finishers MLS has ever seen no longer be able to play it will cost at least a similar figure to replace him with anything approaching like quality.
Kehli Dube’s struggles to convert reasonable to good service against Toronto makes it clear that the Revolution need a proper striker if they have any hope of winning anything but the odd lucky match. With Shalrie back the midfield gets a whole lot better, Perovic can play to his strengths, Niouky improves immediately, the backline tightens up, particularly when Barnes and Osei return and while the pre-2009 Matt Reis is much needed, Preston Burpo’s demonstrable inconsistency is not Steve Nicol’s biggest worry. If I were the gaffer I would be fretting that the front office won’t dish out the dosh if and when the plug gets pulled on Taylor, which will have to be in the next few weeks in anticipation of the post World Cup window for player movement, should he continue to not be able to suit up.
I’m not certain that anyone on the management side is prepared to cut Twellman’s contract, nor is there any indication that the ownership will spill out the cash to bring someone of the quality of, say, Robbie Keane or Jose Sand. And, speaking strictly as a fan, I’d much, much rather see a gallant comeback by TNT than the arrival of New England’s first DP. But all things aren’t equal and management needs to get a grip on the fact that bringing in a thoroughbred to knock balls into the net would hardly be a threat to the now habitually cited team chemistry and certainly preferable to an endless series of botched chances that presently doom the Revolution to the lowest depths of MLS and relegation anywhere else. Boggs, Mansally and Schilawski have all had their evening versions of days in the sun but imagine how different this season would be if Twellman or his equivalent were averaging a goal every other game? It is easy to forget that during the salad days from 2002-2007, that was the rate at which he produced, along with additional valuable tallies by Dempsey, Dorman, Noonan and Ralston, etc. Interestingly if you add the double braces by Boggs and Mansally, plus the hat trick by Schilawski you have a supporting goal rate that is similar to the glorious past at this stage of the year. Of course it has yet to be proven that the new boyz will be able to approach the invaluable totals of their vaunted predecessors by season’s end but crunching the numbers at this juncture does give pause for thought at what might be were there a proper, number one striker in the squad.
Watching the younger players when Shalrie Joseph isn’t playing with them might be compared to seeing a swarm of toddlers set off down the driveway in the direction of Main Street without a favorite uncle to guide them through the traffic. Continuing with the allusion, when the full complement of grownups suits up there is a lot less chaos in the sandbox but if uncle Taylor and his fellow greybeards can’t come out to play then kindly Grampa K and his son Johnny are going to have to loosen up some cash to bring in, appropriately enough, one or two new kids on the block, or his tykes will get no respect at all from the various baddies and bullies that await them on their scheduled play-dates that stretch all the way into early October.
With dollar signs and deductions dancing in my head I set off to Revs training to talk to their most experienced player in terms of fiscal football, Edgaras Jankauskas who has toiled for fifteen different clubs in ten different countries; Zalgiris Vilnius, CSKA Moscow, Torpedo Moscow, Club Brugge, Real Sociedad, Benfica, Porto, OGC Nice, FBK Kaunas, Heart of Midlothian, AEK Larnaca, Belenenses, Skonto Riga, REO LT Vilnius and the Revs.
When I mentioned that I wanted to talk about taxes the genial, lanky Lithuanian looked at me hard and remembering his skills as a boxer I backpedaled quickly, saying I was writing on football finances. Smiling at that rejoinder, he settled into a fascinating conversation.
JIM: You have played in a wide variety of countries that have a number of different approaches to paying players, what are some of the differences between say, Spain and Portugal and the United States that you have noticed?
EDGARAS: Well, every country is different and in my experience I’ve faced issues that I never expected, it isn’t even possible to know about them (ahead of time), they are unbelievable. For example, in Portugal, when I was playing (there) you get a salary, you get a contract, let’s say you sign a contract…for, let’s say, a net (figure), so what does that mean? You get a salary, a figure, you sign not like in America (where) you sign for gross, and then you deduct, you know what I am saying? So that if you have kids, a wife, it makes a difference. In Portugal you have a law which nobody (knows about), it’s not possible to know it because you sign a net contract and then at the end of the year (there is) some re-calculation and that way (some) more taxes (are applied). So, for example, if you stay there a year and the next year you leave, or you leave at the end of a year, so you are physically not able to receive those papers (with your bill), if you are not applying to receive those papers you can be accused of a financial crime.
It is so weird, for example there is a law which isn’t comparable with, say, U.S. jurisdiction (so) in my case, and this is a fact, I was a Porto player but I went on loan to France, so… I didn’t fill out those papers because they (arrived) later, I was gone already (to France). And then they waited for a year and then accused me (because) in the law there existed (a clause) which says that if you are working for a Portuguese team or agency or something and you are receiving your money in Portugal (but) like in my case you are working in a different country, so you should not fill (out) those papers, so even lawyers say, “well, we don’t know which way to fight them because we are fighting against ourselves because there is no law which can accuse you but you are accused (nonetheless).”
JIM: So you are saying that even if you are playing in the European Community there are still specific national laws that govern and bind contracts?
EDGARAS: It is so complicated that I don’t think anybody knows the exact answers to those questions. It’s very weird, now with the European Union we can exchange information but it’s so weird that I had those problems, you know? (I said, you could) find me, they said we didn’t know which country you are playing in, you’re kidding me (I said), Google it! Then send me the paper, is it really that difficult?
JIM: (laughing) I apologize for laughing…
EDGARAS… That was funny, really, at the beginning it’s funny but afterwards, you know, if you don’t do taxes the next step (it’s) a financial crime! Even in America, I was here last year, so I played a season and then I left, I didn’t know if I’d be back or not. So, if I wouldn’t be back I wouldn’t fill (out) those papers, but I was back, I received the papers which I had (until) May or so to fill out, so I did it. But, imagine, if the (team) didn’t pick up my option, what happens then? In Europe, (or) here in America, you didn’t do your taxes, so I don’t say you committed a crime but you did something wrong.
JIM: So wouldn’t your expectation as a player, playing in Europe that you would have an agent who would be able to sort through all this maze of differing regulations, or that the club would help you, or does it really come down to luck?
EDGARAS: At the end of the day, everybody cares about themselves, if you have a very good agent, and a good relationship, maybe he can help you, can advise you but in most cases it’s all on your shoulders. So you are responsible because the tax officers, the financial institutions, they would never accuse your agent, you didn’t fill out the papers, that’s all!
JIM: And of course soccer players are high profile, they are making big salaries, at least by comparison; so they are a natural target to go after.
EDGARAS: Sometimes you are in a situation where it’s not like you don’t want (to) but you can’t, like in this situation, I leave America, I will not be back, so my taxes are not made and what’s next? And it happens a lot in different countries, I played in ten different countries, so you cannot keep coming back or calling somewhere because they don’t care, they just send (the forms and papers) to the last address and that’s all, so that is complicated enough.
JIM: Shifting the subject a bit, in most countries there are bonus systems with the clubs, has that been true in your experience that there would be performance bonuses on top of the contract, is that fairly common or only limited to a few countries?
EDGARAS: It’s not even up to countries, it is up to the clubs, so you have those bonuses, sometimes they are in the contract, sometimes it is just a verbal agreement, you know it isn’t a secret, sometimes they pay black money but that was a long time ago and doesn’t exist much anymore.
JIM: I read a statistic somewhere that in the English Championship, the second division there, the bonuses can be roughly from 50% to 80% above player’s stated salaries.
EDGARAS: That is very possible, in Germany I (was going to) sign one contract, we didn’t get to a final agreement but the salary was much less than the (money) for appearances, even appearances, not for victories or points or goals, you get on the field, you get money right away. Just two appearances makes (as much as) a salary, so, yes, you do that; there are fewer forms, fewer ways to sign a contract.
JIM: As a general observation, do you think a bonus system is helpful in establishing competition for places, in giving an edge to training and playing?
EDGARAS: That’s a tough question, I think so, I think so. I won’t say that a player gets more motivation because he is being paid for appearances but, well, for young players, I think it is always better to have something like that, extra motivation.
JIM: Many people criticize MLS because there isn’t any apparent bonus system and that would be a really effective way to insure that there was more competition for places, etc.
EDGARAS: No doubt, players would be happy to get some bonuses for victories, of course it gives you something extra, you know, maybe those few last yards (that) you would run like to die when you know that you are going to get a big bonus, of course it would make a difference, I’m sure of that.
JIM: This team has many young players now, more so than when you were here a year ago. What do you see as the roles for senior players now, are you as much teachers as teammates, in a sense?
EDGARAS: In my opinion and in my experience it is good to have some experienced players in your team because they have already seen a lot. I don’t say you can copy or follow them but you can see their behavior in tough situations because football is not like playing and training for fun, sometimes you have tough situations and you are losing, so somebody has to take the responsibility on their shoulders to say, to cheer, (to lead). I’m sure the team made up only of young players would miss something.
JIM: Of course in this country most of the young players that you have on a team are coming straight from college, so they don’t have the three or four years of playing on junior level or reserve professional teams that a player would have anywhere else in the world. Does that make it even more difficult?
EDGARAS: Yes, for sure, for sure, remembering when I was young and growing you always looked at the older players because you can take something, they can teach you something, not even by talking to you but just to (be able to) see what they do. Of course we have to be real professionals, you have to play somewhere and not just stand and shout, that’s not right…
JIM: That reminds me of some lower division games I’ve seen in England, but just to end, I think that is a really interesting point because in this country there is such a different development system for young players than anywhere else and so bringing in senior professionals from other backgrounds, who have played elsewhere and can become role models is even more important, perhaps, than in the rest of the world.
EDGARAS: Well sure, I think that is why MLS has tried to bring experienced players from Europe, stars like Beckham, it is always good to have that example.